UAE-based Dana Gas and Crescent Petroleum said they signed a memorandum of understanding with Yemen to set up a gas city in the country.
In a statement, the two companies said the Gascities Ltd, a joint venture between Dana Gas and Crescent Petroleum singed the deal to explore the possibility of developing the concept of gas city inside Yemen. The first phase of the project includes preparing a feasibility study on gas crude materials as well as finalizing the process of identifying the site for the project.
The project could attract investments worth US $15-20 billion over 25-30 years, thus doubling foreign investment in Yemen and providing up to 15,000 direct jobs.
The gas city will consist of a chemical industries section and other facilities for the project to be self sufficient of all needed services.
Yemen plans to hold a major conference to promote gas and oil early next year. During the conference, the fifth international tender for onshore and offshore oil production blocks in the country will be announced, according to government sources.
Analysis and forecast: decreasing risk
Yemen has been suffering a massive drop in revenue partly due to rapidly dwindling oil reserves and partly due to the drop of oil prices. Almost 75 % of the government’s revenue is from oil. Yemen therefore has to find immediate and sufficient alternative sources of revenue in order to keep the country together, particularly given increasing separatist calls from the south and the Sa’ada region.
The proposed “gas city” project therefore has the potential to compensate for the massive income drop Yemen is and will continue to experience in the next several years. Without such projects, the viability of a united Yemeni state becomes more questionable, as economic diversification efforts for a post-oil era are far from being developed. However, it should be noted that such a project carries more long-term benefits and that more immediate solutions are required to resolve the current and rapidly expanding economic crisis.
The figure below shows an estimate of the country’s GDP make-up: